Catch Shares: Using the power of market incentives to improve the environment

To those who like the taste of fish or wish to avail themselves of its health benefits, decreasing fishing stocks are creating a real problem. There are fewer fish to eat each year, which means less variety and higher prices for consumers. To those concerned about the environment, overfishing also poses serious ecological problems.

Why is this happening? The government is regulating the commercial fishing industry but in a manner that is inefficient and, more to the point, ineffective. The power of the market place could provide a better solution, an innovative, market-based approach known as catch shares. Where this new approach has been tried, it has been successful, both for fishing production and conservation.

Current public policy regulating commercial fisheries continues to rely largely on outdated central planning -- old fashioned command and control systems that have failed around the globe. Regulations establishing permitting requirements, limiting the types of gear or methods for fishing, limiting areas for fishing, and limiting the length and width of fishing boats, and limiting the engine horsepower for boats have all proven unsuccessful.

Moreover, none of these old command and control regulations provide any incentive for fisherman to conserve fish because they only have a limited time to rush and catch whatever they can, resulting in a ‘tragedy of the commons’. The mad race for more fish can also create safety problems for fishermen. With limited time to fish, they are compelled to operate in bad weather and other unsafe conditions.

In contrast, a system based on the catch shares model involves recognizing that fishermen have property rights – the “shares” – they may use, lease, or sell. With a share, fishermen are permitted to catch a predetermined amount of fish. Government doesn’t regulate the size or speed of their boat, their gear, or the exact days they can fish. At the same time, the fish population is protected and the environment is protected -- all without government trying to dictate the fisherman’s business plan. More importantly, it gives fisherman a personal stake in the health of their fishery. As the health of the fishery improves, so do the fortunes of the fisherman. Healthier fisheries result in higher caps, which in turn lead to an increase in the amount of fish they can take in annually and the success of their own business.

Catch shares would allow fishermen to use smaller boats, use innovative methods, catch fish throughout the year in smaller quantities and be more careful about the fish they bring in -- rather than forcing them to fish heavily, more recklessly than truly necessary in a short season. Catch shares provides a win-win situation -- better fishing and a better environment.

Changing the paradigm and enlisting the fishermen is a proven solution. By giving fisherman a personal stake in the health of their fishery you are harnessing the power of market incentives to manage the market. Crucially, fishermen are then empowered to fish during safer weather and when it’s most economically feasible, with seasons typically lengthening once catch shares have been implemented.

Some of the opposition to catch shares arises out of simple misunderstandings and misinformation. For example, some fear it would prevent them from going fishing with their children, or regulate a family tradition. But catch shares doesn’t touch recreational fishing. It is only for commercial fishing.

Others are suspicious that it is a stealth plan to strengthen government’s regulatory hand. Fears of government regulation are understandable. But catch shares does not give federal regulators greater control -- rather, it reduces their control and will ease regulatory burdens. This is true both in theory, since fishermen regulate the securing of their own catches, and in practice, since the institution of catch shares has typically featured the lengthening of fishing seasons and other regulatory easing.

Still others argue that catch shares is essentially a cap and trade system which in the case of carbon is clearly a bad and costly idea. However, this overlooks the reality that there has been a fishing cap in place for decades. The concept of a season automatically implies a cap of some type. Another key difference is that fish, unlike carbon, is a real commodity that has value outside of a government-constructed regulatory scheme to give it value. Simply stated, the demand for fish is real and based on the prices people are willing to pay. The demand for “carbon credits” is zero absent a government mandate creating them. They are two completely different approaches.

We’ve tried the command and control approach for decades and it has been failing miserably. The catch shares approach has been tried in recent years in some regions with great success. Fishing has flourished and the fish and environment have too. When Congress takes up the reauthorization of Magnuson-Stevens, it needs to include language that allows America’s commercial fishermen to harness the power of the free market with innovative approaches like catch shares.Landrith is the president of Frontiers of Freedom, and a member of the Catch Shares Coalition, an organization committed to promoting free-market approaches to fisheries management. He is a graduate of the University of Virginia School of Law, where he was Business Editor of the Virginia Journal of Law and Politics.